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Friday, January 25, 2013


My clients are often concerned about keeping their car if they file for bankruptcy.  Whether you will be able to keep your car in bankruptcy depends on several factors.  First, how much equity do you have in your vehicle?  In Georgia, a chapter 7 filer has a variety of exemptions available to him.  These exemptions are used to determine what property the filer can keep and what property must be handed over to the bankruptcy trustee for the benefit of the creditors.  Georgia allows a $3,500 exemption for equity in one’s vehicle (or vehicles).  A married couple filing jointly will each have the $3,500 exemption available to him or her.  

This means if your car is paid off, and the value is $3,500 or less, you will be able to keep your car.  If you are still making payments on your car, and the value of the car is no more than $3,500 greater than your loan balance, you may be able to keep the car.  Generally, if you are still making payments on the car and have no more than $3,500 of equity in your car, in order to keep the car, you will need to (1) be current on your payments when you file for bankruptcy, and (2) have the necessary income to continue to make the payments as they come due after the bankruptcy petition is filed.  Often, if you are still making payments on your car, your lender will require you to sign a reaffirmation agreement if you want to keep the car.  A reaffirmation agreement ensures that your bankruptcy discharge has no effect on your obligation to make payments for the vehicle.  

If you have additional questions about bankruptcy, please call Brim Law, LLC at (678) 353-3350 for a free consultation.

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